Citibank Urges Dismissal of Lawsuit Alleging Failure to Prevent Fraud

Citibank lawyers urged a judge Tuesday (Oct. 8) to throw out a suit filed in January by New York Attorney General Letitia James that accuses the bank of failing to protect fraud victims.

The lawyers argued that the bank has protections in place for consumers and that a New York victory in the lawsuit would result in a “dramatic shift” in how electronic payments are processed, Bloomberg reported Tuesday.

Julia Strickland, an attorney representing Citibank, argued that major banks use multiple layers of fraud detection to stop scams; that the Electronic Fund Transfer Act (EFTA) does not govern wire transfers; that many fraudulent transfers are the result of consumers sharing personal information with scammers; and that the bank isn’t responsible for losses if it follows reasonable security procedures, according to the report.

“Citi and the banking industry are not in any way the bad guys here,” Strickland said in court, per the report.

Christopher Filburn, a lawyer for New York, told the judge Tuesday that the case focuses on instances in which money is taken from a consumer’s bank account without their instructions or authorization, according to the report.

Since filing the lawsuit, Filburn said, “We have heard from consumer after consumer.”

When announcing the filing of the lawsuit in January, James alleged that Citi has no protections against account takeovers, misleads consumers about their rights when their accounts are hacked, and unlawfully denies fraud victims reimbursements.

“There is no excuse for Citi’s failure to protect and prevent millions of dollars from being stolen from customers’ accounts, and my office will not write off illegal behavior from big banks,” James said in a press release.

In a statement issued to PYMNTS at the time, a Citi spokesperson said the bank follows all laws and regulations related to wire transfers, works to prevent fraud, and assists clients in recovering losses when possible.

“Banks are not required to make clients whole when those clients follow criminals’ instructions and banks can see no indication the clients are being deceived,” the statement said.

“However, given the industry-wide surge in wire fraud during the last several years, we’ve taken proactive steps to safeguard our clients’ accounts with leading security protocols, intuitive fraud prevention tools, clear insights about the latest scams, and driving client awareness and education.”